The pain of the height of the pandemic may be behind us, but the trauma continues for foodservice. U.S. restaurant operators are getting less and less confident about the future of the industry, according to new data from the National Restaurant Association.
A new survey from the association found that nearly half (46 per cent) of operators feel economic conditions are worse than they were three months ago, highlighting the growing concerns over historic levels of inflation and price crunches. A previous survey from the association had seen 43 per cent of restaurant operators believe conditions will grow worse over the next six months — the highest level of pessimism among restaurants since 2008, as reported by Restaurant Business.
The majority of survey respondents don’t expect a return to normalcy anytime soon. More than four in 10 (41 per cent) believe a recovery in business conditions will take more than a year, and almost 30 per cent think that day will never come at all for their restaurant.
On the topic of inflation, in particular, a huge 94 per cent of restaurateurs say their overall operating costs are higher now than they were pre-pandemic. A similar proportion says the same for food and beverage expenses (88 per cent), for labour expenses (86 per cent), and for utilities (80 per cent).
Raising menu prices, a strategy employed by 9`1 per cent of restaurants in response to this economic strife, can only go so far as inflation continues to surge. Restaurant menu prices jumped 7.6 per cent in the U.S. July year-over-year; slightly below June’s level but still near a 40-year high.
Meanwhile, a recent report found that U.S. restaurant hiring is finally rebounding after several months, but this could further fuel inflation as competition for workers and for wages may drive up prices further.
“The moderate menu price increases aren’t balancing the surging input costs and this is forcing operators to cut hours, change their menus, postpone expansions, and reduce third-party delivery,” noted association president and CEO Michelle Korsmo, per FSR magazine.
Aside from raising prices, nearly two-thirds of restaurant operators have changed menu items, 60 per cent reduced hours of operations, one-quarter (24 per cent) incorporated more technology to combat the situation, and 16 per cent have been forced to cut third-party delivery to save costs.
Restaurants are also looking to try new things to relieve the financial pressure. 16 per cent of restaurant operators told the association that they are adding fees or surcharges to checks to combat rising costs across both full full-service and quick-service. Of those, 75 per cent expect the surcharge will be in place for more than a year.
Overall, around 85 per cent of respondents say they are less profitable than they were before the pandemic.
